On February 23, according to Bloomberg, Nvidia has been a key force in driving the stock market to new highs for many years. But as doubts about AI grow, Wall Street is increasingly worried that regardless of the chip giant's financial results this week, its stock price may be under pressure.

Nvidia's stock price has been trading sideways for months, rising only 1.7% since the beginning of the fourth quarter of last year, slightly worse than the S&P 500's 3.3% gain over the same period. The stock has barely maintained growth this year, ranking in the bottom half of the S&P 500 stock performance. For a company that not long ago led the index with triple-digit annual gains, this performance represents a significant decline.

"From a fundamental perspective, Nvidia's performance remains strong, and the question is whether market sentiment can continue to remain high," said Matt Stucky, chief equity portfolio manager at Northwestern Mutual Wealth Management. "Anxiety surrounding this AI market is continuing to rise in many different areas."

risk stacking

NVIDIA's recent poor performance is largely due to investors' increasing concerns about major companies investing hundreds of billions of dollars in AI research and development, and they have begun to withdraw funds from giant technology stocks. However, the stock market also faces many external risks, which also plague Nvidia's stock price performance.

Geopolitical tensions are high, with the Trump administration threatening to attack Iran. Data released on Friday showed U.S. economic growth slowing while inflation remains stubborn. The labor market appears to be stabilizing after weakness in 2025, leading traders to bet the Federal Reserve will be wary of further rate cuts. In addition, the U.S. Supreme Court just struck down Trump's tariff policy, which was considered beneficial to American companies, but it also brings another layer of uncertainty as the White House considers how to handle the ruling and safeguard Trump's signature economic policies.

Nvidia shares start the year weak

All these factors put Nvidia, which is about to release its fourth-quarter and full-year financial results on Wednesday, in a delicate position. Investors are expecting results to well beat Wall Street expectations and boost outlook for the coming quarters. But no matter what Nvidia does or says, it may be difficult to drive its stock price up significantly. Nvidia shares fell after its last two quarterly reports.

"This will be an important earnings release, but I think Nvidia stock price may fall on the earnings report because the performance may not be good enough. From the information we have, the earnings and forecasts should be okay, but they may not meet the market's expectations." Rhys Williams, chief strategist at Wayve Capital Management, said.

Tech giants are not performing well

Nvidia is not alone in this dilemma. The Big Seven, the biggest contributors to stock market gains over the past few years, have also been stagnant for months. A Bloomberg index tracking these companies has fallen nearly 1% since the beginning of the fourth quarter, underperforming the S&P 500 over the same period.

Mixed earnings reports from major technology companies have heightened market caution about AI, with Wall Street paying particular attention to its huge AI-related capital expenditures. Microsoft Corp., for example, fell after reporting strong overall results as investors focused on slowing growth in its Azure cloud computing business and record spending expectations.

That being said, there is a positive side to Nvidia's stock price woes: its market value has fallen significantly. Currently, Nvidia's forward price-to-earnings ratio is below 24 times, close to its lowest level in five years and well below the average of about 38 times over the past five years. If investors are pleased with the earnings results and hear encouraging words from CEO Jensen Huang, the relatively cheap share price could serve as a buying catalyst.

"Nvidia has been the savior of the market to some extent. People are hoping that Nvidia can come up with a great financial report and calm the market a little bit." Will McMahon, chief equity strategist at MFA Wealth, said.

However, even if the stock price rises, the company's price-to-earnings ratio is likely to remain flat as Wall Street in general remains skeptical of AI and Nvidia's performance.

If the earnings results fail to calm investor nerves, it could bring more volatility to AI-related stocks and the broader market.

“If Nvidia sneezes, everyone will catch a cold,” said Luke Rahbari, CEO of Equity Armor Investments.